World Bank warns Nigeria against dependence on oil

The World Bank President Jim Yong Kim, Thursday, called on the governments of Nigeria and other developing countries to urgently make critical investments that would shield their economies from sudden shocks in the global economy in the years ahead, warning that the GDP growth that saw the country out of recession was too lean for comfort.

In his opening remarks at the 2017 annual meeting of the International Monetary Fund (IMF) and the World Bank, Kim urged the Nigerian government to rethink its development strategies by investing more on people rather than focussing its energies on oil sales and other activities that do not engender real growth.

He said: “Nigeria has to think ahead… the conversation we need to have with Nigeria, in many ways, has to do with investments in human capital. The percentage to GDP that Nigeria spends on education is less than one per cent.

With the challenge in the northern part of the country and the heat on the economy by the drop in oil prices, Nigeria has to think ahead and invest more in its people. The things that will help the economy to grow rapidly should be what the country has to focus on. You can’t just rely on oil prices. What the country should focus on are the resources of growth for future. And this is true for most African countries”

Kim’s advice came against the backdrop of a new report in Africa’s Pulse, a bi-annual analysis of the state of African economies conducted by the World Bank which noted that the economic growth in Sub-Saharan Africa was recovering at a modest pace, and projected to peak up to 2.4 per cent in 2017 from 1.3 per cent in 2016, which remains below the April forecast of 2.6 per cent.

The report had noted that the rebound in growth on the continent was led by the region’s largest economies including Nigeria which pulled out of a five-quarter recession in the second quarter of 2017, and South Africa which emerged from two consecutive quarters of negative growth. It added that improved global conditions, including rising energy and metal prices and increased capital inflows, have helped support the recovery in regional growth but rather warned that the pace of the recovery remains sluggish and will be insufficient to lift per capita income in 2017, unless governments take steps to invest more in human capital development and other key sectors of the economy.

According to the World Bank chief, it has become imperative for leaders of these economies to make more robust investments to strengthen the slim gains recorded in the global economy after several years of disappointing growth.

He said it was on the basis of this that finance ministers and central bankers from over 189 members countries have gathered in Washington DC, to discuss the challenges and opportunities facing the global community.

Kim said “after several years of disappointing growth, the global economy has begun to accelerate. Trade is picking up, but investment remains weak. We’re concerned that risks such as a rise in protectionism, policy uncertainty, or possible financial market turbulence could derail this fragile recovery.

Overall, we’re seeing growth rise in most developing and advanced economies – which is why countries need to make critical investments now. This is the time to implement the reforms that are going to insulate against potential downturns in the future.”

The World Bank chief noted that countries would need to build resilience against the overlapping challenges facing the world today, including the effects of climate change, natural disasters, conflict, forced displacement, famine, and disease.

He said the World Bank was already working to help countries address these challenges, by maximising access to development financing, including partnering the private sector to provide solutions whenever they can help to achieve development goals, and reserving scarce public finance for where it is most needed – particularly investments in human capital.

Kim restated the need for countries to invest more in their people as the bank makes accelerated efforts to help countries invest more – and more effectively – in their people.

We’re hoping that this project can show heads of state and finance ministers how long-term investments in their people can help grow economies – and create the political space for leaders to make these critical investments.

He stated that over the next year, leading up to the 2018 Annual Meetings in Indonesia, the bank will be working with a wide range of experts in economics, global health, and education to develop the Human Capital Project in various countries including Nigeria, stressing this is one of the latest effort by the World Bank Group to meet rising aspirations all over the world, to truly create equality of opportunity, and build new foundations in the project of human solidarity.